We just published something about this topic only to find an email inquiry from a client asking what are the basics to such agreements. Here’s a crib sheet which is no substitute for specialized advice.
- Prenuptial agreements are valid in Pennsylvania. In fact, they can be said to be favored in the law.
- Neither party needs a lawyer to do a prenuptial but these can be among the world’s most dangerous documents when poorly drafted.
- Parties to a prenuptial need to disclose income and assets to each other as part of the process. There is a hiccup in the way the statute is drafted which has been interpreted by some to say that disclosure of finances can be waived. That’s a dicey way to interpret the law in this writer’s opinion and could be fatal to the enforcement of the agreement.
- Prenuptial agreements technically don’t need to be in writing but if things aren’t in writing a court is going to ask why they weren’t before enforcing such an agreement.
- Under Pennsylvania law, the assets you bring “to the marriage” are premarital and not subject to distribution unless you make them joint with your new spouse. Also, property you receive by gift or inheritance is also not subject to distribution except if the assets appreciate during marriage. The appreciation during marriage is subject to distribution.
- If you marry without a prenuptial agreement, all property you acquire during marriage is subject to distribution in divorce regardless of who has title. If you marry without a prenuptial and die, your spouse can make claims against your estate even if your will says your surviving spouse gets nothing. This is especially important in the world of pensions because your spouse is legally presumed to be the sole beneficiary of any qualified pension.
- There are really three basic types of prenuptials:
- “Mature” prenuptials involving spouses over 60 who are looking to preserve their wealth for their kids rather than share it with a spouse. They can be pretty simple.
- “Young people prenups” These are often messy not because of the young people but their parents. First people 30 and under will live a long time with the agreement and unless they tear up the agreement it will govern their child bearing years and many changes of employment. Often parents want their children to have such an agreement because they don’t want their child’s new spouse to invade the family larder of wealth the parents have accumulated. Meanwhile the kids who don’t yet have their parents’ money are asking “Why is this so complicated? I just want to marry and have a happy life with the person I picked.” Seems easy, right? It isn’t.
- “Middle Age” prenups. These clients are typically divorced but still building wealth in anticipation of retirement. They fear that the second or third marriage may end in divorce as well (and the data suggest their fear is justified) and they don’t want to ride that coaster a second time. These agreements are less complicated than the young people’s dilemmae but there can still be problems. Example: wealthy woman and not so wealthy future spouse want to marry. Wealthy woman can afford a second house at the shore but her spouse is the one with “regular” income that will be needed to secure a mortgage to buy the dream home. There needs to be some understandings about what happens if the house is acquired but the relationship founders.
- There is no such thing as a standard prenuptial except for ones for the “mature” crowd which say: “Mine is mine and yours is yours. We have no financial obligation to each other.” Even that agreement needs a financial disclosure and people often forget to list assets. That can be fatal to the agreement if one party challenges it. The other thing is that past is not necessarily prologue. Not too long ago we worked on a matter where the future husband wanted an agreement to protect him in his second marriage from equitable distribution and support claims. Low and behold, his new spouse went back to work and secured employment with a start-up which went public. Now she was worth far, far more than the husband. The agreement intended to protect him actually turned around and deprived him of any right to get a piece of the huge wealth his spouse earned while they were married. We have also seen agreements waiving all rights to support only to find that one spouse became completely disabled and really did need assistance. Pennsylvania is not a state that evaluates the prenuptial agreement at the time the parties separate. But some states take a completely difference position.
- So……happy holidays.